How to lower supply chain risks
Supply chain glitches along the value can lower businesses’ productivity levels. In 2020 the volume of out-of-stock products as a result of supply chain glitches was estimated at $1.14 trillion. Such out-of-stock experiences do disincentivize the customers who may have invested so much trust in the business. In the end, if the experiences become a recurring decimal, they can set the exit alarm bell for the customers. The bottomline would plummet in such circumstances.
The out-of-stock scenarios are triggered by many supply chain challenges comprising logistic hurdles, anti-competitive practices, low capacity, regional unrest and rising issues of natural disasters. These challenges lower off-shoring reliability. They make outsourcing vital segments of the production processes to external agencies upon which a business has less control nightmarish. They make the adoption of predictive tools unavoidable.
Chris Kolmar, an economist, defines the supply chain uniquely. He says, “Supply chain is a valuable network connecting a company to its suppliers.”
Emphasising the importance of a supply chain network, Kolmar adds, “This enables the company to produce its products. Supply chains can include things like other people, entities, information, and resources. Overall, the term “chain’ represents the process of creating the product that will ultimately be purchased by a customer.”
It is imperative to guide against shocks from supply chain inefficiency. This is key to avoiding unwanted customer experiences. Here are steps proposed by experts to avoid supply chain glitches:
a. Embrace onshoring – According to Darrell West of the Centre for Innovation Technology, United States, recent supply chain trends such as virus outbreaks and geopolitical unrest presuppose likely future disruption to the global movement of goods. When this disruption strikes, getting finished goods or raw materials inbound in time for processing and delivery to customers can become an issue. In this case, it is advisable to start searching for local substitutes for a global supply partner.
b. Consistently track your inventory levels – Tools such as QuickBooks and Excel have been proposed by Chris Kolmar to keep track of the inventory level. This action is vital for planning, mitigating shortages and promoting useful activities targeted at flagging possible crises and maintaining consistency in the levels of inventory per time.
c. Identify backup suppliers – Aside from working with a major supplier onshore or offshore, BigCommerce, a portal online, advises businesses to build a relationship with other suppliers who can step in when the major ones fail. This diversification strategy sounds smart as it can come in handy at any time.
d. Stay ahead of crisis – BigCommerce as well, advises businesses to adopt AI-enabled tools to forecast future disruption to the supply chain. It explains how the use of predictive tools works, “Use technology to evaluate potential threats to your supply chain. Try AI-enabled mapping and environmental analysis solutions, aggregate apps that provide geopolitical overviews, and systems that can evaluate cyber threats. Even social media can be used as a predictive tool to identify potential shortages and disruptions.”
Effective management of the supply chain is a key competitive advantage. Whether your business is operating within a B2C or B2B framework, taking steps to create efficient inventory management would rob off on customer experience and overall business performance.